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Noallegiance

Homes Value Linked to Wages

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I know it's just not possible, but imagine if a town had insanely cheap prices and reasonable local salaries.  It would be a very interesting experiment to see how well that town did economically compared to the wider economy that has insane house prices compared to local wages.

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Well, this is where we are. "Socialists" brown and Blair effectively gave a once-in-a-lifetime voter bribe that helped socially re-engineer society via house price debt\wealth and until politicians stop (or external economic events stop) the economic bribing of boomers and easy money foreign investors, it could probably go on for a good while. There has been a Frankfurt school re-education of expectations. Very successfully. Kind of thing that would have started riots years ago but apart from the black community getting pissed off now and again, does not now, pretty much is just accepted now as the new normal. The odd thing though is that property and BTL etc.,  is  a very, very heavily subsidised and pampoured industry sector with plenty of politicians, policy makers and journos on board but when sheffield steel workers, Yorkshire miners or Sunderland car wworkers are thrown in front of the bus, there is never any connection between the two policies ever in the mainstream. Agreed if the political side of the property industry was tempered, you would go back to a situation where Chelsea and Kensington are prohibitively expensive and Dagenham or Dartford are quite cheap (instead of mostly prohibitively expensive to many normal wage earners).

 

 

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Steve Keen proposed a similar idea where the amount you could borrow to buy a house would be a ratio of the annual rental yeild of that house. This way you avoid an 'arms race' of leverage as people take on more and more debt to compete with each other.

But like most sensible ideas in this area this would reduce ability of the banks to make money by peddling debt- so it will never even be considered.

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On Saturday, November 19, 2016 at 1:15 PM, satch said:

That's easy. London v Burnley. Massive success v total fail.Cambridge v Rochdale .... same result.

No need to link house prices and wages .... just remove all the props and prices will find their own level v wages and it will probably average out at around three or four times .... just like it has in the past pre all the 'help' and QE.

There is only a tenuous link between wages and house prices imo. Trying to solve the riddle that is Cambridge probably comes down to supply of land (green belt) a young demographic (BTL territory), public sector input ( University and NHS) and proximity to London

 

There are many northern constituencies with half of the unemployment, twice the household savings and only marginally less income than Cambridge. But not having the constraint on land or BTL drive house prices are half the level. Richmond and Derbys Dales to name two.

Edited by crashmonitor

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But after all these nonsense help-to-buy-schemes each government trots out around election time, why not this, the obvious one? If you are earning the national average, it is a main home for you only or your family and you fill in the various declarations that you have no other financial assets and that if you sell (say less than 10 years), you have to pay back a government fund on a sliding scale for any profit (or any loss maybe becomes a social housing/housing Authority stock in the interim)?  It has to be better than current nonsense like shared ownership, which started around 75% and is now down to 10% in some cases, just pushing entry prices ever higher and a nice, locked-in state subsidy for the industry players like wimpey, barrat, etc. Of course, it won't happen because the house builders and banks will be straight on the phone to the prime minister for a little 'chat', but just imagine in another dimension, universe, how straight forward it SHOULD be just to efficiently build housing products at a keen consumer price in a functioning market economy.

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